Someone please explain

[Banenarr]

I would just like to know what i missed here

2 days ago i looked at NAB , make believe i bought a very small amount of shares waiting for it to show signs of going up before putting more in.

I bought for 40.20
I looked at moving averages on a daily and on a weekly chart , the
daily was - a 5 day , 8 day and 13 day
the weekly was 21 , 34 ,55

To my knowledge that looked fine

I looked at a MCAD and on the weekly and daily it was fine aswell
Momentum was up
OBV was high
Volume was steady
I had a feeling that the move had lost steam but it wasnt showing from what i saw

now the price has gone to 38.50 and maybe more.
and all the other readings are going bad aswell

Can someone inform me of somthing that i didnt see that showed that NAB was going to fall so steeply

 

[It's Snake Pliskin]

I would just like to know what i missed here

2 days ago i looked at NAB , make believe i bought a very small amount of shares waiting for it to show signs of going up before putting more in.

I bought for 40.20
I looked at moving averages on a daily and on a weekly chart , the
daily was - a 5 day , 8 day and 13 day
the weekly was 21 , 34 ,55

To my knowledge that looked fine

I looked at a MCAD and on the weekly and daily it was fine aswell
Momentum was up
OBV was high
Volume was steady
I had a feeling that the move had lost steam but it wasnt showing from what i saw

now the price has gone to 38.50 and maybe more.
and all the other readings are going bad aswell

Can someone inform me of somthing that i didnt see that showed that NAB was going to fall so steeply

Rabbit indicators are lagging.

 

[123enen]

I think NAB went ex dividend today.
Anyone that owned shares at 4.10 PM yesterday will receive the 84 cent dividend + franking credits.
Anyone that bought shares from this morning will not receive the dividend so naturally the market will pay less for the shares..... about the value of the dividend.

 

[riley]

Hi Banenarr,

123enen is right.

Your broker's website should have company info, if not it's avail here;

http://www.asx.com.au/asx/markets/DividendSearchPage.jsp

Upcoming dividend info is available at;

http://www.incomeinvestor.com.au

or

http://www.exdividendwatchlist.com.au


Don't feel bad, I expect most blue chip traders have been caught out like that at least once. Then they wised up about the exdate.
Just another learning experience!

riley

 

[chops_a_must]

Those links are very helpful, cheers.

 

[tech/a]

Both Snake and the others are correct.
The REASON for the fall is ex div.
The REASON you wont see falls coming with oscillators particulaly sharp falls is that they lag.

The longer the time frame the longer the lag.

 

[Banenarr]

Thanks For the help.

What indicators do you feel can predict sharp falls ?

 

[Kauri]

If you're lucky, sometimes the relationship between vol and price..

 

[kaveman]

Indicators do not predict anything, they tell you what has already happened.

What they do is give an indication that historically you get the probability that a certain price movement might occur after the indicator has a certain condition true
The higher the probability the less unsure you will be that the outcome will match the expectation.

By indicators I include everyything from technical analysis, charting and fundamental etc

 

[spitrader1]

Thanks For the help.

What indicators do you feel can predict sharp falls ?

reading the fin review to see what is coming up to be ex div?? hehehe

 

[Magdoran]

I would just like to know what i missed here

2 days ago i looked at NAB , make believe i bought a very small amount of shares waiting for it to show signs of going up before putting more in.

I bought for 40.20
I looked at moving averages on a daily and on a weekly chart , the
daily was - a 5 day , 8 day and 13 day
the weekly was 21 , 34 ,55

To my knowledge that looked fine

I looked at a MCAD and on the weekly and daily it was fine aswell
Momentum was up
OBV was high
Volume was steady
I had a feeling that the move had lost steam but it wasnt showing from what i saw

now the price has gone to 38.50 and maybe more.
and all the other readings are going bad aswell

Can someone inform me of somthing that i didnt see that showed that NAB was going to fall so steeply

Hello Banenarr,


I agree with Snake’s “one liner” – you’re using a lagging indicator, and with all due respect, many do not know how to use these effectively (wavepicker uses an effective displacement/cycle style for example).

What your indicators were showing you was the bullish impetus after the fact. There were patterns well before this drive that were tradeable that your MAs etc you were using wouldn’t have told you because you weren’t looking at the chart (the right way), you were looking at the indicators.

I had a key resistance level for NAB based on the division of the range (weeks earlier) – take the 28/04/06 $38.10 high and the 20/06/06 $33.07 low and extend this up above the high. 50% extended up was $40.61 (I usually take a few cents off the actual target since the underlying can trade just below the target price). This is a critical area of resistance, and a counter trend (pull back) was fairly likely from this price – just study a range of stocks and you’ll see this kind of pattern emerge time after time.

Also, the top bar looked like a false break. With both the extension, price action, and the bar, the three together suggested at minimum a brief halt to the drive. The chart still looks bullish, but with this kind of momentum combined with ex div will make the underlying chop up and down hard. If you understand patterns of trend, and specifically counter trends, this can help you in your timing on entry and exit. Also the XFJ is looking pretty toppy...

Your current approach got you long at a top. Timing is everything, and learning about trends and counter trends I believe is central to using T/A methods effectively. Some may not agree with this, and I do recognise that there are a plethora of approaches out there. But if you’re going to use charts, why not learn how to read charts without the indicators first, and just use bar chart and volume as a foundation?

Personally I agree with McLaren’s view that using oscillators and moving averages are like “trading shadows on the wall”. MA’s and MACD I’ve seen used more effectively for longer term investment style trading with year long targets or longer.

If you are looking to position trade, these indicators are very susceptible to whipsaw effects in a volatile market in the short term, giving frequent entry and exit signals, often at the wrong time. It can be the path to the death of 1000 cuts as stops come into play just when you should be entering not exiting.



Regards


Magdoran

 

[wavepicker]

Hi Banenarr,

Mag and the others have summed up the use of momentum indicators very well. The only indicate what has already happened. Using these types of indicators is like chasing shadows across the wall.

In order to understand a moving average, then you must realise what it is doing first. A moving average is a very crude cutoff filter. The trace you see in the MA is the representation of the sum of the cycles greater than the span chosen.(The Law of Summation) As tech said the larger the span the greater the smoothing but at an increased penalty of lag. Due to this lag component, the MA is "out of sync" with respect to price (phase distortion).

In order to centre it, you must move it back in time 1/2 the span you have chosen for the MA.

On some lagging indicators can have leading qualities ( ie divergences with respect to price), however there is an art to this and it can be rather subjective and/or inconsistant.

Apart from some specialized low lag filter MA's that have created by John Ehlers, the weighted moving average is probably the lowest lag filter you can use, that is readily available. It might pay to do some experimenting with this MA.

Cheers